US urology company Cogentix Medical, controlled by Lewis Pell and Accelmed, which in turn is controlled by its founders Dr. Uri Geiger and Mori Arkin, has bought a stake in Israeli company Vensica Medical. Cogentix will initially invest $2 million, with an option to acquire the entire company for $8 million.
Cogentix markets medical equipment for the urology market, including a device for electrical stimulation of the bladder. Vensica is developing an ultrasound device that improves penetration by drugs of the bladder walls. The product is in the animal trials phase.
Listed at a $155 million market cap, Cogentix is the latest company in the portfolio of Accelmed, which acquires US public companies with an existing product and poor growth, and adds to them additional new products in need of a sales apparatus. US company EndoChoice Holdings, for example, a gastroenterology company, acquired an Israeli product, and was then sold to Boston Scientific for double the value at which Accelmed bought it. Accelmed now hopes to repeat the process in the urology sector with Cogentix, and is hoping for an even better return.
When acquired by Accelmed a year ago, Cogentix had two products on the market (a device for treatment of overactive bladder syndrome by electrical stimulation of the bladder, and a sterile urological endoscope), but also a $25 million debt. The debt was to Lewis Pell, known to the Israeli medical industry as a former investor in medical device companies in cooperation with Prof. Shlomo Ben-Haim. In a combined deal, Accelmed invested $25 million in the company, and Pell converted the debt into shares in the company. Accelmed currently owns 26.7% of Cogentix, and Pell 33%. Cogentix has acquired a UK and a French company since that deal, and has successfully withstood an attack by medical device company Medtronic, which sought to compete with Cogentix's bladder stimulation product. Medtronic recently announced that it was downsizing its activity in this sector. Cogentix's share price is currently 65% higher than the price at which Accelmed made its investment.
Vensica, a graduate of the Trendlines incubator, provides a delivery platform for drugs for treating urological cancer and overactive bladder syndrome. Israeli medical sector investors became aware of these sectors because of Israeli company UroGen Pharma (Nasdaq: URGN), which operates in the same market and has a $410 million market cap. Prof. Arie Belldegrun, who recently sold Kite Pharma for $12 billion, is chairman of UroGen, and the most prominent Israeli investors in the company are the Pontifax fund and Arkin Holdings, meaning that Mori Arkin is betting on two different horses in this market.
UroGen is more advanced in the field at present, but Vensica founder and CEO Avner Geva says, "The treatments are different and the market is huge; there is room in it for two companies." While Vensica actively inserts the drug into the bladder wall, UroGen has developed a system that keeps the drug longer in the bladder, and therefore eventually achieves better penetration than the currently existing products.
Accelmed partner Geiger told "Globes" that Congentix was planning to establish a development center in Israel, adding that more acquisitions would be made in the coming quarters.
Published by Globes [online], Israel Business News - www.globes-online.com - on October 2, 2017
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